Alphabet shares rise on revenue beat as ad sales recover

Sales, excluding partner payouts, were US$58.07bil (RM259bil) in the quarter, the company said. That topped analysts’ projections for US$56.98bil (RM254bil). — Bloomberg

NEW YORK: Google parent Alphabet Inc reported first-quarter results that exceeded analysts’ estimates, demonstrating that its search advertising business is so far weathering the economic downturn and increased competitive threats.

Sales, excluding partner payouts, were US$58.07bil (RM259bil) in the quarter, the company said in a statement. That topped analysts’ projections for US$56.98bil (RM254bil).

Google continues to fare better than its rivals as economic pressures force advertisers to reduce their spending. Search advertising has been generally more immune to swings in the economy than spending on social media, where competitors such as Facebook parent Meta Platforms Inc and Snap Inc have seen more dramatic declines in demand.

The company’s closely watched cloud unit also made money for the first time, reporting a profit of US$191mil (RM852mil).

Alphabet said in a note to investors ahead of the results that it had shifted the reporting of some costs from Google Cloud to Google Services.

“We are pleased with our business performance in the first quarter, with search performing well and momentum in Cloud,” chief executive officer Sundar Pichai said in a statement.

The company also authorised share buybacks of up to US$70bil (RM312.4bil).

Alphabet leadership has been waging a cost-cutting drive to preserve the company’s profit margins as advertisers trim their budgets. Net income was US$15bil (RM67bil).

Investors have also expressed concern that Google’s long-dominant search advertising business may be newly vulnerable to conversational artifical intelligence products such as OpenAI’s ChatGPT, which is being showcased by Microsoft’s Bing search.

Yet the search advertising part of Google’s business grew at a healthy clip in the quarter, potentially allaying those concerns for now.

“Search performance will serve as an early indicator of Google’s ability to maintain its dominance in the area responsible for the majority of its revenue,” Evelyn Mitchell, a senior analyst with Insider Intelligence, wrote in a note. — Bloomberg